Henry dropped out of Stanford High School and is now busy with the development of Cisco and managing the assets of Nicholas Bookstore.
The next day, Woolf returned the embezzled company funds, anxious about potential repercussions from Henry. Many shareholders had assumed Henry would not sell the bookstore, but they were mistaken. Henry moved swiftly and, within a week, reached out to three well-known bookstores in California, finalizing intentions to sell. When representatives from these bookstores came to Nicholas Bookstore's headquarters, Woolf and the other shareholders were left stunned.
"Henry, you have no right to do this!" Woolf shouted at him.
"Why not? I am the controlling shareholder, and I formally notified you at the board meeting. Thus, selling the bookstore complies with all procedures," Henry replied calmly. "As promised, the offer is still a 5% premium!"
After speaking, Henry led the bookstore representatives into the living room, with Woolf and the other shareholders trailing behind, unsure of what to expect.
At the negotiating table, Henry had already discussed the preliminary terms with the representatives. Together, the three bookstores agreed to acquire Nicholas Bookstore, excluding the brand name. The total acquisition price was set at $20 million.
Woolf and the others realized they were about to incur a loss: the bookstore had originally been valued at $24 million, which meant a loss of $4 million by selling it for $20 million. To make matters worse, the brand name had little value to them, and Woolf had to give up his shares at a 5% premium to Henry.
After this calculation, it was evident that if the sale went through, they would be at a significant loss.
"Chairman, I... I will sell you the shares I hold," a minority shareholder said to Henry.
"Yes," Henry replied, giving him a knowing look and nodding.
"Chairman, I want to sell too!" another shareholder chimed in.
Before long, most of the minority shareholders expressed their intention to sell their shares to Henry, leaving only Hank Woolf. Woolf, as the vice president holding 12.5% of the shares, was reluctant to bow to Henry. He hesitated, but Henry smiled playfully and said, "Mr. Woolf, it seems you don't plan to sell your shares. Haha, good for me; I'll save more money."
Woolf's face went pale. "No, no. I plan to sell my shares too!"
"Mr. Woolf, it seems you're a smart man; you know how to read the room!" Henry smiled sarcastically. "Now, let's transfer the shares to my name, and I'll have finance write you a check!"
"Good, good!" the shareholders replied in unison.
An hour later, Woolf and the others left the company, satisfied. Henry watched them depart and shook his head internally. If it weren't for a desire to avoid disputes over the "Nicholas Bookstore" brand, he wouldn't have bought their shares at a premium. After all, they were shareholders, and the brand name held intrinsic value for them.
At 3:00 PM, Henry signed a contract with the three bookstores. Leading up to this moment, he had successfully recruited a capable talent, Geely Hutt, a 30-year-old team leader in book procurement. Hutt was incredibly skilled and well-connected with major publishing houses, so Henry decided to hire him as the manager of the purchasing department.
Yes, Henry planned to establish a new company modeled after Amazon Bookstore, and the name of this company would undoubtedly be "Nicholas Bookstore"!
Henry's grandfather had left him a substantial inheritance, including bank deposits and villas, bringing his total assets to over $30 million. However, he faced a grim reality: the U.S. inheritance tax was severe, requiring him to pay nearly half of it. In the end, Henry dutifully paid $17 million in taxes, feeling as though he had lost a second skin upon leaving the tax office!
Nicholas Bookstore was also based in San Jose. Although the timing wasn't ideal, Henry could begin building a team and honing their skills. Having sufficient funds at his disposal helped, especially since he understood the rapid evolution of the internet age. He recognized that failing to seize this opportunity could lead to being left behind.
Henry moved into San Jose to live with the Posacks, primarily for convenience. Cisco's development brought him excitement; according to Posack, the first router was expected to launch in August, which was at least six months earlier than in his previous life. While living in San Jose, Henry taught himself while continuing to write novels. The West German Publishing House continuously sent representatives to follow up on his manuscripts, and Henry realized he needed to finish the Harry Potter series quickly, knowing future writing time might be scarce.
Recently, "Harry Potter and the Chamber of Secrets" had topped the American novel bestsellers list for six consecutive weeks, selling over three million copies and surpassing the first book. The West German Publishing House celebrated, eager to promote Henry as a literary hero. When Henry received the second manuscript payment, it amounted to over $3 million, nearly $2 million more than the previous payout. Lerner often joked, "Henry, you write novels every day. I believe that one day, you will become the richest man in the world!"
Henry rolled his eyes and smiled, "I'm already the richest man in the world because I own 60% of Cisco's shares!"
Lerner only laughed at his claim, not fully convinced.
On July 1st, after much anticipation from the West German Publishing House, Henry sent the third book, "Harry Potter and the Prisoner of Azkaban," which he had written earlier, for publication. Soon, advertisements for the new installment flooded newspapers and media outlets.
"The talented young author brings us a new adventure with 'Harry Potter and the Prisoner of Azkaban'!"
"A new book by an eleven-year-old genius writer!"
Indeed, Henry turned eleven on June 19th. Due to the overwhelming popularity of Harry Potter, many fans affectionately referred to Henry as "Harry Potter." Furthermore, behind the scenes, the West German Publishing House announced various aspects of Henry's life, garnering attention from the public. Unfortunately, his uncle Peter's family endured significant backlash as a result, facing ridicule from fans across the globe. Following the viral success of the first Harry Potter book, the British Penguin Publishing House approached Henry and signed an authorization contract, granting them the European paper rights for the series and establishing a 12% royalty rate. However, they would settle the manuscript payment annually.
Before long, a small film company from Hollywood inquired about the rights to adapt his novels to film.
When Henry asked how much they would offer, the person in charge, seeing Henry's youth, assumed he could be easily swindled and blurted out, "One million dollars for the adaptation rights to the entire book series!"
"Get out!!!" Henry's internal instincts kicked in as he realized he was being misled.
"Mr. Williams, please don't be upset. The price is negotiable," the film company representative smiled nervously, "What do you suggest?"
"Sorry, but I have no intention of selling the film rights to my novels. If that changes, I will reach out," Henry replied, dismissing him.
As more Hollywood studios came to him, he turned each one away. Henry had learned the value of the Harry Potter intellectual property—it was not just the income from book sales that mattered, but the potential profits from merchandise and adaptations if the films were successful. Therefore, he would prefer to let a capable film studio create a classic rather than risk a poor adaptation for a small sum!
Special effects would be crucial for the success of Harry Potter.
Now in early 1985, approaching August, Henry felt the growing anticipation within Cisco. Innovation was on the horizon as the new product neared completion. However, a mix of excitement and anxiety loomed among the team; they were treading on uncharted territory.
Henry had taken to visiting the laboratory to offer input. His unconventional ideas often thrilled the entire R&D team.
Posack remarked, "This is my student, my most proud student!"
On August 5th, Cisco's first router was finally completed. Posack asked Henry to name it. After some thought, Henry declared, "Let's call it Cisco85, in honor of August 5, 1985. It's a meaningful name, isn't it?!"
"That's a fantastic name!!!" Posack responded enthusiastically when he heard Henry's choice.
And so, the first Cisco router was officially named: Cisco85.
With the product ready, it was time to sell it.
Posack suggested selling it to Stanford University.
Henry shook his head, understanding that was a typical thought process from a technical perspective. "How do capitalists operate? You have to give it away for people to use!"
Having been exposed to both sides of business, Henry retorted, "Mr. Posack, your idea is great, but it's too slow. I think we can offer the routers to some notable universities or research institutions. After a period of use, if they want to keep it, they'll have to purchase it. I bet that once they use our company's router, they'll find it indispensable!"
"Okay!!!" Posack exclaimed, exhilarated.
However, Lerner, the company's financial officer, poured cold water on the enthusiasm: "The company doesn't have much capital. We won't even be able to pay wages!"
"Then I'll invest another two million..." Henry stammered, feeling somewhat guilty. Adding another $2 million would dilute the Possacks' shares. However, raising capital was a necessity. He reassured himself that financing was essentially a common method of funding; why should he let others profit from it?
After some discussion, the Posacks ultimately accepted Henry's investment proposal.
In terms of share distribution, Henry would only need 10% of the additional shares, which seemed fair. Conversely, Sequoia Capital had previously raised $2.5 million after Cisco's development, taking a third of the total shares, which was an example of their predatory behavior.
The Posacks felt conflicted; initially, Henry had invested $1 million and received 60% of the shares. Now, less than a year later, with only one product launched, he asked for an additional $2 million but only agreed to give 10% of the shares. It felt as though they were taking advantage of a child!
After a thoughtful discussion, the Posacks decided to offer Henry 25% of the shares instead.
"That's too generous!" Henry exclaimed, swallowing hard upon hearing the decision.
"Not at all!" said Posack.
Henry shook his head. He appreciated the sincerity of the Posacks and believed they should not take advantage of him. They were good mentors who had treated him well and sharing such a significant equity felt morally questionable. He didn't want any negativity in their relationship, which could disrupt the management of the company. If there were issues due to this dynamic, it could lead to significant problems down the line!
"Hmm, let's compromise at 15%. That should be enough for me," Henry suggested firmly.
Seeing his determination, the Posacks eventually agreed to this share distribution. As a result, they grew even fonder of young Henry, treating him like their own child.
In the end, Cisco's share distribution was as follows: Henry held 75%, and the Posacks retained the remaining shares.